An International Monetary Fund (IMF) mission has begun reappraisal of Bangladesh's tax-expenditure status on direct taxes, tax incentives to businesses and compliance issues through consultation with National Board of Revenue (NBR.)
In a series of meetings scheduled for March 4-15, geared towards necessary reforms, the revenue authority would present before the lender's tax-policy mission a list of short- and medium-term priorities to increase direct tax receipts, sources said.
According to an agenda of the NBR, both the entities would discuss what aspects of the income tax are working well, what the challenges behind revenue mobilization are, and how income tax is viewed in relation to business competitiveness.
On Monday, the NBR provided an update on income-tax-expenditure reporting and its impact so far noted.
The Fund has set a target for an increase in the country's tax-to-GDP ratio by 0.5% this fiscal year from the existing 7.9%.
Earlier, the NBR has prepared a primary study of TE as per recommendation of the IMF where it has identified that expenditure ate up 3.56% of country's GDP in FY21.
During the latest meeting, income-tax incentives would also come up for a rigorous scrutiny as to how the government views income-tax incentives, what essential mechanisms are to encourage business investment versus rationalizing support through a more neutral approach to encourage growth, what the view of Bangladesh is on income taxation and the promotion of social objectives.
The mission -- meant for promoting reforms set forth in the $4.7 billion loan package -- would discuss whether businesses availing tax holidays are filing tax returns or if the NBR verifies the information furnished in their tax returns.
Both online tax return and manual submission would be reviewed in the meetings to know its coverage so far.
The IMF team would give a presentation on micro-simulation modeling, tax-expenditure assessment and evaluations.